Charles Schwab (SCHW) and Interactive Brokers (IBKR) face solid trading activity in Q1, while Robinhood Markets (HOOD) and Coinbase Global (COIN) have more pronounced weakness in crypto, BofA Securities said in a note emailed Thursday.
BofA said Iran-related tensions are driving a risk-off sentiment, reducing retail engagement while accelerating the growth of client cash sweep balances.
For Q1, BofA expects Charles Schwab to beat estimates on strong trading, while Interactive Brokers is likely to meet expectations. In contrast, Robinhood Markets and Coinbase Global are expected to post softer quarters, according to the note.
Looking ahead, the firm anticipates continued softness in Q2, especially for crypto-linked platforms, and sees lower client assets triggering lower fees for wealth managers.
BofA said it remains bullish on the long-term growth of digital brokers, but less bullish near-term citing slowing retail engagement and organic growth. Robinhood Markets is a top pick, BofA said.
BofA cut its price target on Coinbase Global to $234 from $288, Robinhood Markets to $119 from $122, Interactive Brokers to $83 from $84, LPL Financial (LPLA) to $504 from $543, Raymond James Financial (RJF) to $173 from $198, and Charles Schwab to $90 from $94.
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